India's Crude Oil Benchmark Tops $100 as Middle East War Escalates
Key Takeaways
- •India's crude import benchmark, the Indian Basket, rose to $101.07 per barrel on Friday, crossing $100 for the first time since May.
- •The September average Indian Basket price stood at $99.38 per barrel as of Monday, up from monthly averages of $83 in June, $82 in July, and $90 in August.
- •India's crude import bill rose 60% year-on-year in the April–June quarter, with the July bill up 41%.
- •Freight rates from Ras Tanura to India have jumped more than 400% since February 28, when the war began and Iran closed the Strait of Hormuz.
- •The price is set to rise further this week, with sustained levels above $100 pressuring India's import bill, trade deficit, and fuel pricing.
India’s average crude import price climbed above $100 per barrel at the end of last week and is set to rise further this week, as international crude prices rallied amid intensified hostilities in the Middle East.
The Crude Oil FOB Price, also known as the Indian Basket of average sweet and sour grades, surged to $101.07 per barrel on Friday, crossing the $100-a-barrel threshold for the first time since May, according to data from the Indian Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC).
The Indian basket is the average of a derived basket comprising the sweet-grade benchmark Dated Brent and the sour-grade benchmark of the Oman and Dubai average imported by Indian refineries each month.
As of Monday, the average Indian Basket price so far in September stood at $99.38 per barrel, up from $83 in June, $82 in July, and $90 in August. The average reached $100 in early September as international crude prices rallied amid the re-escalation of the Middle East conflict, with the United States and Iran exchanging strikes and fire for more than a week.
The run-up in the Indian basket matters beyond the trading screen: India imports the bulk of the crude it refines, so the benchmark feeds directly into the country’s import bill, trade deficit, and fuel pricing. A sustained period above $100 per barrel would mark a sharp reversal from the first half of the year, when monthly averages held in the $80–$90 range.
India’s crude oil import bill has soared in recent months, driven by reduced oil flows from the Middle East and heightened shipping risks in the Strait of Hormuz. Freight rates on the key route from Ras Tanura on Saudi Arabia’s Persian Gulf coast to India have jumped by more than 400% since February 28, when the war began and Iran closed off the Strait of Hormuz.
India paid 60% more for crude oil imports in the April–June quarter compared with the same period last year, as the surge in oil prices offset slightly lower import volumes. The increase continued into the start of the third quarter, with the July import bill 41% higher than a year earlier.
With the article noting the price is set to rise further this week, the figures to watch ahead include PPAC’s weekly basket updates and monthly import data, which will show how long the elevated prices and shipping costs persist.
By Tsvetana Paraskova for Oilprice.com
